The power of pre-disaster resilience

“Society faces the urgent challenge of adapting to, and mitigating the impacts of climate change, in this era of escalating natural disasters,” says Jon Gale, chief underwriting officer, AXA XL Reinsurance, as he described findings from the recently launched research collaboration between AXA XL and CCRS.

The new report, titled “Optimising Disaster Resilience: Protecting society through building codes and investment in infrastructure”, offers insight into how pre-disaster investment in resilience can yield significant returns, in terms of financial savings and protection for families and businesses.

One of the most compelling findings from the research is the significant return on investment that can be achieved.

“For every dollar spent on pre-disaster resilience by the US Federal Emergency Management Agency (FEMA) between 2000 and 2022, an average of $16 was saved in damages,” Gale said.

This figure highlights the value of investing in infrastructure and resilience before a disaster strikes, rather than focusing solely on recovery after the event.

Gale explained the broader context, noting: “The research seeks to answer a few fundamental questions, such as ‘Does disaster preparedness work?’ and ‘If society invests in pre-disaster resilience, is there a bang for the buck?’.”

The answer, according to the results, is a clear “yes”.

The report also looked at the impact of building codes on losses. A comparison of three hurricanes similar in size and path (Charley in 2004, Wilma in 2005 and Ian in 2022) highlighted how building codes established after the 2004 event have significantly reduced wind damage impact. 2022 showing similar findings. 

CCRS cited a study by the National Association of Home Builders following Hurricane Irma in 2017. The work shows that for buildings satisfying the then latest codes (between 2008 and 2017) 95 percent suffered no damage. FEMA conducted a study post Ian in 2022 which highlighted how building codes established after the 2004 event have significantly reduced wind damage impact. 

“Pre-disaster spending on infrastructure in combination with strong building codes means families and businesses are much better protected,” said Gale.

It’s about strategic thinking

For the re/insurance industry, the research offers a clear argument for approaching risk more strategically.

“The link between a warming climate and higher nat cat losses is increasingly obvious,” Gale stated, adding that re/insurers need to rethink their approaches to underwriting guidelines, pricing and risk management in the face of increasingly severe weather events and exposure growth.

“With this type of analysis and research we are trying to influence our clients to dedicate time to consider the impact of hazard change on their own portfolios now and in the future.

“This involves clients spending time identifying risks that are vulnerable and risks which are resilient and tailoring underwriting strategy accordingly.

“Reports such as this show the clear benefits of building codes and infrastructure and the more progressive clients will build this into their underwriting,” Gale explained.

“This is not about just adjusting policies, but fundamentally rethinking how risk is assessed and managed in a world where the frequency and severity of disasters are on the rise,” he said.

“Getting families and businesses back on their feet quickly and in a better state is one thing—reducing or avoiding the loss in advance is another and something the re/insurance business is uniquely positioned to help with.”

“We’re encouraging our clients to think beyond the current year and focus on the long-term.”

Get clients engaged

Gale spoke to the importance of engaging clients in this strategic shift, saying: “Our role as reinsurers is not just providing financial support after a disaster but being proactive partners in risk management,” he said.

“We’re encouraging our clients to think beyond the current year and focus on the long-term and incorporating the understanding of vulnerability and resilience in their portfolio. This is about changing the conversation.”

He concluded by emphasising the need for a collaborative approach.

“The findings from this research are not just for AXA XL or our clients—they’re for the entire industry and other interested stakeholders.

“We want to share what we’ve learned to help everyone improve their risk management strategies. This is not a competition—it’s about ensuring the resilience of communities and economies globally.” 

Jon Gale is chief underwriting officer of AXA XL Reinsurance. He can be contacted at: jonathan.gale@axaxl.com 

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